Online content downloads from foreign sites will be imposed 15% tax

After banning Rs.500 and Rs.1000 rupee notes the Government has passed a new rule: on downloading music, e-books or buying storage from overseas services, you will be charged a service tax 15%.

Domestic suppliers that let you download movies already incur service tax, but this does not apply to to overseas suppliers, even if the recipient is a local body, individual or a government agency based in India. The new rule which is to go into effect starting December 1 will level the playing field between domestic and overseas supplier. ‘

According to Sunil Gabhawalla, chartered accountant and indirect tax expert, the new rule will impact overseas companies providing various services like advertisements, web subscriptions, cloud hosting, music, e-books and gaming, among others.

“Since the overseas service provider is likely to collect this tax from the end user who downloads these services, it will increase the cost for the consumer,” said Sunil to Economic times.

Industry experts say that there could be practical difficulties in payment of such taxes if the overseas supplier has no presence in India.